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Amphastar Pharmaceuticals Reports Financial Results for the Three Months and Full Year Ended December 31, 2018

Reports Net Revenues of $89.7 Million for the Three Months Ended December 31, 2018

RANCHO CUCAMONGA, Calif., March 12, 2019 (GLOBE NEWSWIRE) -- Amphastar Pharmaceuticals, Inc. (NASDAQ: AMPH) (“Amphastar” or the “Company”) today reported results for the three months and full year ended December 31, 2018.

Fourth Quarter Highlights

Net revenues of $89.7 million for the fourth quarter, up 48% from the quarter ended December 31, 2017

GAAP net income attributable to Amphastar of $1.9 million, or $0.04 per diluted share, for the fourth quarter

Adjusted non-GAAP net income attributable to Amphastar of $6.2 million, or $0.13 per diluted share, for the fourth quarter

Full Year Highlights

Net revenues of $294.7 million for the fiscal year, up 23% from the previous year

GAAP net loss attributable to Amphastar of $5.7 million, or $(0.12) per diluted share, for the fiscal year

Adjusted non-GAAP net income attributable to Amphastar of $10.4 million, or $0.21 per diluted share, for the fiscal year

Dr. Jack Zhang, Amphastar’s CEO, commented: “The fourth quarter ended a great year for our Company. During the quarter we received approval for Primatene® Mist, which followed multiple ANDA approvals and launches throughout the year. Sales grew 48% in the quarter with Primatene® Mist’s launch, and capped off sales growth of 23% for the year.”

Three Months Ended

Year Ended

December 31,

December 31,

2018

2017

2018

2017

(in thousands, except per share data)

Net revenues

$

89,690

$

60,402

$

294,666

$

240,175

GAAP net income (loss) attributable to Amphastar

$

1,867

$

787

$

(5,738

)

$

3,647

Adjusted non-GAAP net income attributable to Amphastar*

$

6,231

$

4,115

$

10,399

$

17,334

GAAP diluted EPS attributable to Amphastar shareholders

$

0.04

$

0.02

$

(0.12

)

$

0.08

Adjusted non-GAAP diluted EPS attributable to Amphastarshareholders*

$

0.13

$

0.08

$

0.21

$

0.36

___________________________________ * Adjusted non-GAAP net income attributable to Amphastar and Adjusted non-GAAP diluted EPS attributable to Amphastar shareholders are non-GAAP financial measures. Please see the discussion in the section entitled “Non-GAAP Financial Measures” and the reconciliation of GAAP to non-GAAP financial measures in Table III of this press release.

Fourth Quarter Results

Three Months Ended

December 31,

Change

2018

2017

Dollars

%

(in thousands)

Net revenues:

Enoxaparin

$

19,085

$

11,347

$

7,738

68

%

Lidocaine

13,661

10,384

3,277

32

%

Phytonadione

12,942

10,703

2,239

21

%

Naloxone

7,703

8,434

(731

)

(9

)%

Medroxyprogesterone

7,448

—

7,448

N/A

Epinephrine

1,264

3,665

(2,401

)

(66

)%

Primatene® Mist

3,574

—

3,574

N/A

Other finished pharmaceutical products

17,257

11,452

5,805

51

%

Total finished pharmaceutical products net revenues

$

82,934

$

55,985

$

26,949

48

%

API

6,756

4,417

2,339

53

%

Total net revenues

$

89,690

$

60,402

$

29,288

48

%

Changes in net revenues were primarily driven by:

Enoxaparin increases due to higher average selling prices, as well as increased unit volumes

Medroxyprogesterone, which was launched in the first quarter of 2018

Primatene® Mist, which was launched in the fourth quarter of 2018

Epinephrine declines due to lower unit volumes

Three Months Ended

December 31,

Change

2018

2017

Dollars

%

(in thousands)

Net revenues

$

89,690

$

60,402

$

29,288

48

%

Cost of revenues

55,001

39,912

15,089

38

%

Gross profit

$

34,689

$

20,490

$

14,199

69

%

as % of net revenues

39

%

34

%

Changes in cost of revenues and the resulting increase to gross margin were primarily driven by:

The launch of medroxyprogesterone acetate, isoproterenol hydrochloride and Primatene® Mist, which have higher margins

Enoxaparin sales, which had lower margins due to an increase in reserves for purchase commitments related to price increases for both crude heparin and semi-purified heparin, which are used for the production of enoxaparin

Three Months Ended

December 31,

Change

2018

2017

Dollars

%

(in thousands)

Selling, distribution and marketing

$

2,596

$

1,629

$

967

59

%

General and administrative

13,814

9,221

4,593

50

%

Research and development

16,734

11,386

5,348

47

%

Selling, distribution and marketing expenses increased due to higher freight costs and marketing expenses related to the launch of Primatene® Mist

General and administrative expenses increased primarily due to higher legal fees and expenses at the Company’s subsidiary Amphastar Nanjing Pharmaceuticals, or ANP

Research and development expenses increased primarily due to material expenditures at ANP for pipeline product candidates, increased clinical trial expenses, and Food and Drug Administration, or FDA, filing fees

Year-End Results

Year Ended December 31,

Change

2018

2017

Dollars

%

(in thousands)

Net revenues:

Enoxaparin

$

53,371

$

36,593

$

16,778

46

%

Lidocaine

43,328

37,602

5,726

15

%

Phytonadione

41,897

37,946

3,951

10

%

Naloxone

37,195

42,342

(5,147

)

(12

)%

Medroxyprogesterone

24,071

—

24,071

N/A

Epinephrine

10,055

25,914

(15,859

)

(61

)%

Primatene® Mist

3,574

—

3,574

N/A

Other finished pharmaceutical products

57,568

49,742

7,826

16

%

Total finished pharmaceutical products net revenues

$

271,059

$

230,139

$

40,920

18

%

API

23,607

10,036

13,571

135

%

Total net revenues

$

294,666

$

240,175

$

54,491

23

%

Changes in net revenues were primarily driven by:

Enoxaparin increases due to higher average selling prices, as well as increased unit volumes

Medroxyprogesterone, which was launched in the first quarter of 2018

Primatene® Mist, which was launched in the fourth quarter of 2018

Lidocaine increases primarily due to increased unit volumes

Epinephrine declines due to the discontinuation of the unapproved vial product in 2017

Naloxone declines due to lower unit volumes

Year Ended December 31,

Change

2018

2017

Dollars

%

(in thousands)

Net revenues

$

294,666

$

240,175

$

54,491

23

%

Cost of revenues

187,681

149,666

38,015

25

%

Gross profit

$

106,985

$

90,509

$

16,476

18

%

as % of net revenues

36

%

38

%

Changes in cost of revenues and the resulting increase to gross margin were primarily driven by:

The launch of medroxyprogesterone acetate, isoproterenol hydrochloride and Primatene® Mist, which have higher margins

Enoxaparin sales, which had lower margins due to an increase in reserves for purchase commitments related to price increases for both crude heparin and semi-purified heparin, which are used for the production of enoxaparin

Year Ended December 31,

Change

2018

2017

Dollars

%

(in thousands)

Selling, distribution and marketing

$

8,156

$

6,460

$

1,696

26

%

General and administrative

49,888

44,458

5,430

12

%

Research and development

57,564

43,503

14,061

32

%

Gain on sale of intangible assets

—

(2,643

)

2,643

(100

)%

Selling, distribution and marketing expenses increased primarily due to increased freight costs and marketing expenses related to the launch of Primatene® Mist

General and administrative expenses increased primarily due to higher legal fees and expenses at ANP

Research and development expenses increased primarily due to expenditures related to the expansion of our ANP facility, as well as an increase in FDA filing fees and an increase in clinical trial expenses

Cash flow provided by operating activities for the year ended December 31, 2018 was $38.2 million.

Certain GAAP and non-GAAP measures for comparative periods in 2017 were revised for immaterial errors.

Pipeline Information

The Company currently has five abbreviated new drug applications, or ANDAs, filed with the FDA targeting products with a market size of over $750 million, three biosimilar products in development targeting products with a market size of over $14 billion, and 11 generic products in development targeting products with a market size of over $12 billion. This market information is based on IQVIA data for the 12 months ended December 31, 2018. The Company’s proprietary pipeline includes a new drug application for intranasal naloxone. The Company is currently developing four other proprietary products, which include injectable, inhalation and intranasal dosage forms.

Amphastar’s Chinese subsidiary, ANP, currently has nine Drug Master Files, or DMFs, on file with the FDA and is developing nine additional DMFs.

Company Information

Amphastar is a specialty pharmaceutical company that focuses primarily on developing, manufacturing, marketing, and selling technically-challenging generic and proprietary injectable, inhalation, and intranasal products. Additionally, the Company sells insulin API products. Most of the Company’s finished products are used in hospital or urgent care clinical settings and are primarily contracted and distributed through group purchasing organizations and drug wholesalers. More information is available at the Company’s website at www.amphastar.com.

Amphastar’s logo and other trademarks or service marks of Amphastar, including, but not limited to Primatene®, Amphadase® and Cortrosyn®, are the property of Amphastar.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, the Company is disclosing non-GAAP financial measures when providing financial results. The Company believes that an evaluation of its ongoing operations (and comparisons of its current operations with historical and future operations) would be difficult if the disclosure of its financial results were limited to financial measures prepared only in accordance with GAAP. As a result, the Company is disclosing certain non-GAAP results, including (i) Adjusted non-GAAP net income (loss) attributed to Amphastar and (ii) Adjusted non-GAAP diluted EPS attributed to Amphastar’s shareholders, which exclude amortization expense, share-based compensation, and impairment charges in order to supplement investors’ and other readers’ understanding and assessment of the Company’s financial performance because the Company’s management uses these measures internally for forecasting, budgeting, and measuring its operating performance. Whenever the Company uses such non-GAAP measures, it will provide a reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures. Investors and other readers are encouraged to review the related GAAP financial measures and the reconciliation of non-GAAP measures to their most directly comparable GAAP measures set forth below and should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.

Conference Call Information

The Company will hold a conference call to discuss its financial results today, March 12, 2019, at 2:00 p.m. Pacific Time.

To access the conference call, dial toll-free (877) 881-2595 or (315) 625-3083 for international callers, five minutes before the conference. The passcode for the conference call is 4878419.

The call can also be accessed on the Investors page on the Company’s website at www.amphastar.com.

Forward Looking Statements

All statements in this press release and in the conference call referenced above that are not historical are forward-looking statements, including, among other things, statements relating to the Company’s expectations regarding future financial performance, backlog, sales and marketing of its products, market size and growth, the timing of FDA filings or approvals, including the DMFs of ANP, the timing of product launches, acquisitions and other matters related to its pipeline of product candidates, its share buyback program and other future events. These statements are not historical facts but rather are based on Amphastar’s historical performance and its current expectations, estimates, and projections regarding Amphastar’s business, operations and other similar or related factors. Words such as “may,” “might,” “will,” “could,” “would,” “should,” “anticipate,” “predict,” “potential,” “continue,” “expect,” “intend,” “plan,” “project,” “believe,” “estimate,” and other similar or related expressions are used to identify these forward-looking statements, although not all forward-looking statements contain these words. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties, and assumptions that are difficult or impossible to predict and, in some cases, beyond Amphastar’s control. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in Amphastar’s filings with the Securities and Exchange Commission. You can locate these reports through the Company’s website at http://ir.amphastar.com and on the SEC’s website at www.sec.gov. Amphastar undertakes no obligation to revise or update information in this press release or the conference call referenced above to reflect events or circumstances in the future, even if new information becomes available or if subsequent events cause Amphastar’s expectations to change.

Common stock: par value $0.0001; 300,000,000 shares authorized; 51,438,675 and 46,631,118 shares issued and outstanding as of December 31, 2018 and 50,039,212 and 46,623,581 shares issued and outstanding as of December 31, 2017, respectively